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Cyprus: E-Commerce


Cyprus passed a number of laws in 2004 relating to e-commerce, including the Regulation of Electronic Communications and Posts Law (112(I)/2004), and the Legal Framework for Electronic Signatures and for Relevant Matters Law (N.188(I)/2004). The 2002 Law on Radiocommunications was also amended.

These laws included the transposition of the EU's regulatory framework into national law, although Cyprus was slow off the mark introducing the necessary secondary legislation for the Law on Electronic Communications.

The Cyprus government says the island is a communications hub and an international business centre in the Eastern Mediterranean region due to the forward-looking policies of the Cyprus Telecommunications Authority (CYTA).

Despite its fine words, however, the government has lamentably failed to move forward with liberalisation of the telecommunications sector, which in most respects remains firmly under the monopoly control of CYTA. This organisation's profits are so high that the government year after year uses it as a mine for contributions towards the national budget, and in 2003 CYTA was shamed into refunding CY£20m to its subscribers.

Competitors to CYTA in the mobile sector have struggled to make headway. Only in the Internet sector has any significant degree of competition been allowed, where there are a number of ISPs in addition to CYTA itself.

Under liberalisation legislation originally introduced in December 2000, a telecommunications regulator has been appointed, although until 2003 he was without the resources that would allow him to be effective. There is no doubt that this was largely due to reactionary forces within the government and the industry which wish to preserve CYTA's monopoly for as long as possible.

The regulator has amongst his responsibilities the granting of new telecoms and postal licences and the authorisation of telecommunications networks & services. He was appointed for a six-year term and will determine the procedures for granting licences for telecommunications and postal services and the creation of telecommunication and postal networks.

As part of the government's plan to liberalise the telecommunications sector, plans were announced in March 2001 to table legislation which would privatise the state-owned CYTA, with 94% of the shares intended for the private sector and 6% for the company's employees. Needless to say, this plan came to nothing.

The first real sign of progress was the decision to issue two mobile phone licenses, for which bidding began late in 2002, with the first license being awarded as of right to CYTA. But in June, 2004, the bidding process for a second license was threatened after Atlantic Crest was disqualified from participating in the auction for the licence for failing to meet the minimum tender requirements in a decision also backed by the Attorney General. Eventually the second license was awarded to Scancom, which trades under the name of areeba.

A price war began in 2005 between Vodaphone-CYTA and competitor areeba; in mid-2005 CYTA refused to accept a Commission ruling that it should re-instate higher prices pending an appeal to the Supreme Court. The Court ruled in July that CYTA must obey the ruling.

In February 2002 Cyprus Electricity Authority (EAC) vice-president Andreas Louroudjiatis told a parliamentary committee that the EAC planned to enter the telecommunications sector once it is liberalised. Speaking before the House Finance Committee, which was discussing the annual budget for the EAC and the Telecommunications Authority, EAC said his department would soon be in a position to offer a wide range of services, including telephone, data and cable television facilities, using optical fibres.

"We are looking for a strategic investor or a collaborator to assist us with the technical side. Five foreign companies have already expressed an interest to undertake the task," he added.

Communications Minister Averoff Neophytou however said that public companies should not compete against each other, saying: "There cannot be real competition between two companies which have the same owner. We are only trying to ensure consumers' best interests." But he conceded that he could not stop the EAC from expanding into the area of telecommunications: "They are welcome to join the club if that's what they want," he said, stressing at the same time that, "private companies should also be encouraged to do so in order to increase competition in the field."

A handful of private telecommunications companies have entered the Cypriot market under a creeping programme of liberalisation, including MTN, Cablenet, TelePassport, OTEnet Telecom and PrimeTel.

One of the priority growth sectors of the Cyprus government's Strategic Development Plan (2007-2013), is ICT. Specifically, Cyprus welcomes foreign direct investment to expand and/or develop projects on e-Government, e-Business, e-Learning, e-Inclusion, e-Health and overall ICT services.



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